By Shannon Holmes
April 28, 2003

On May 31, the federal extended unemployment law expires. This law, PL 108-1, provided an extra 13 weeks of federal unemployment benefits to workers who exhausted the 26 weeks of state benefits expires. The extension of unemployment benefits affected 2.5 million people at a cost of $7.2 billion. The bill has continued benefits coverage beyond May 31 for those who qualify under a phase-out provision that was not part of the program that expired on December 28, 2002.

According the Department of Labor (DOL) Employment and Training Administration (ETA), during the first three months of 2003, 575,000 people exhausted both their 26-week state unemployment benefits and their 13 weeks of extended benefits. Over the course of 2002, 2.2 million people exhausted all of the benefits. DOL has estimated as of March of this year there were about 8.4 million American workers unemployed.

Prior to the Spring recess, Representative Charles B. Rangel (NY), ranking member on the Ways and Means Committee, and Representative Benjamin L. Cardin (MD) introduced H.R. 1652, a bill that would extend the extra jobless benefits for six months.

In the Senate, Minority Leader Tom Daschle (SD) and Edward M. Kennedy (MA) have introduced two similar bills, S 225 and S 923. Kennedy spokesman Jim Manley stated that the Senator would likely offer an extension of unemployment benefits as amendment to tax cut legislation that majority Republicans have said they will be advancing. It makes sense, he said, to couple "tax cuts for the wealthy and unemployment benefits for hard-working Americans."

The Human Resources Subcommittee of the Committee on Ways and Means on April 10 heard from some witnesses that stated unemployment benefits could create a disincentive for some recipients to work. Other witnesses said that data gathered during a robust economy is not relevant now that there are not enough jobs for people who want them and referenced the testimony given by Federal Reserve Board Chairman Alan Greenspan before Congress in November: "When you get into a period where jobs are falling, then the arguments that people make about creating incentives to work no longer are valid."

Representative Wally Herger (CA), Chairman of the Human Resource Subcommittee, urged the review of more than just an extension of benefits. "We should make sure benefits and services help workers go back to work quickly, instead of delaying returns to work."

The Administration has proposed such an incentive through the creation of personal re-employment accounts (PRAs), which would provide unemployed workers up to $3,000 for job training and job search expenses. If a person obtains a job within 13 weeks and is employed in the same job for 6 months, he is able to receive the balance of his PRA as an incentive bonus. However, if the all of the funds provided through the PRA are used, recipients are not allowed to utilize the Workforce Investment Act intensive services for a period of one year. Before the recess, concerns about paying for the war with Iraq led Republican lawmakers to put the creation of PRAs on hold.